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Huawei phone is latest shot fired in US-China tech war

The Biden administration is preparing to issue a final version of the technology restrictions it first put out last October, and the revised rules could come within weeks.

Huawei’s development of the phone does not necessarily demonstrate a huge leap forward for Chinese technological prowess – or the total failure of US export controls, analysts said.

Because Chinese companies no longer have access to the most cutting-edge machines for making semiconductors, they have developed novel workarounds that use older machinery to create more powerful chips.

But these methods are both relatively time-consuming for manufacturers, and produce a higher proportion of faulty chips, limiting the scale of production.

“This does not mean China can manufacture advanced semiconductors at scale,” said Mr Paul Triolo, an associate partner for China and technology policy at Albright Stonebridge Group, a consultancy. “But it shows what incentives US controls have created for Chinese firms to collaborate and attempt new ways to innovate with their existing capabilities.”

He added: “It is the first major salvo in what will be a decade or more struggle for China’s semiconductor industry to essentially reinvent parts of the global semiconductor supply chain without US technology included.” NYTimes

NEW YORK - In the midst of the US commerce secretary’s goodwill tour to China last week, Huawei, the telecom giant that faces stiff US trade restrictions, unveiled a smartphone that illustrated just how hard it has been for the United States to clamp down on China’s tech prowess.

The new phone is powered by a chip that appears to be the most advanced version of China’s home-grown technology to date – a kind of achievement that the US has been trying to prevent China from reaching.

The timing of its release may not have been a coincidence.

The Commerce Department has been leading US efforts to curb Beijing’s ability to gain access to advanced chips, and Commerce Secretary Gina Raimondo spent much of her trip defending the US crackdown to Chinese officials, who pressed her to water down some of the rules.

Mr Raimondo’s powerful role – as well as China’s antipathy towards the US curbs – was reflected online, where more than a dozen vendors cropped up on Chinese e-commerce sites to sell phone cases for the new model with Ms Raimondo’s face imprinted on the back.

Doctored images showed Ms Raimondo holding the new phone, next to phrases like “I am Raimondo, this time I endorse Huawei” and “Huawei mobile phone ambassador Raimondo”.

Chinese media have referred to the phone as a sign of the country’s technological independence, but US analysts said the achievement still most likely hinged on the use of American technology and machinery, which would have been in violation of US trade restrictions.

Beginning in the Trump administration and continuing under President Joe Biden, the US has steadily ramped up its restrictions on selling advanced chips and the machinery needed to make them to China, and to Huawei in particular, in an attempt to shut down China’s mastery of technologies that could aid its military.

For the past several years, those restrictions have curtailed Huawei’s ability to produce 5G phones.

But Huawei appears to have found a way around those restrictions to make an advanced phone, at least in limited quantities.

Although detailed information about the phone is limited, Huawei’s jade-green Mate 60 Pro appears to have many of the same basic capabilities as other smartphones on the market.

An examination of the phone by TechInsights, a Canadian company that analyses the semiconductor industry, concluded that the advanced chip inside was manufactured by Semiconductor Manufacturing International Corp (SMIC) of China and was operating beyond the technology limits that the US has been trying to enforce.

Associate Professor Douglas Fuller from Copenhagen Business School said SMIC appeared to have used equipment stockpiled before restrictions went into effect, equipment licensed to it for the purpose of producing chips for companies other than Huawei, and spare parts acquired through third-party vendors to cobble together its production.

Huawei and SMIC did not respond to a request for comment.

The Commerce Department also did not respond to a request for comment.

Chinese social media commentators and news sites celebrated the smartphone’s release as evidence that US restrictions could not hold China back from developing its own technology.

“Regardless of Huawei’s intentions, the launch of the Mate 60 Pro has been imbued by many Chinese netizens with a deeper meaning of ‘rising up under US pressure’,” the state-run Global Times said in an editorial.

The release of the Huawei phone raises questions about whether Ms Raimondo’s department will continue trying to build goodwill with Chinese officials – or potentially take a more aggressive stance towards cracking down on China’s access to US technology.